§ 28  Disinherited Spouses  [151-176]

 

We are now in the midst of a reform movement that is restructuring family law and, in the process, changing the way we view spousal inheritance rights.  This section reflects how the law is responding to the changing roles of women, as the traditional prototype becomes increasingly less representative of the modern family.

 

         A.  Community Property

 

Community property states have created a form of property ownership that recognizes the mutuality of marital relationships.  In particular, rather than treat spouses’ earnings as the separate property of each, this doctrine lumps together “the fruits of the marriage” and calls them “community property.”

 

               1.   Separate Property

 

Property that each spouse brings into the marriage (or acquires by gift or inheritance intended for themselves individually) is called “separate property.”

 

2.      An Example

 

Consider Sam and Nina, a “traditional” couple in which Sam works outside the home and produces a paycheck and Nina maintains the household and takes primary responsibility for raising the children.  In a common law state, Sam’s paycheck is his, as are assets he acquires with those funds.  In a community property state, the paycheck is community property, with each spouse owning half.  Under a community property regime, the radio Nina owned before they were married is her separate property, but the TV they bought later out of Sam’s paycheck is community.

 

Assets acquired over time pose special problems.  For example, Sam may have purchased a house before the marriage, but continued after the marriage to make mortgage payments out of his earnings.  Community property states recognize both the separate and the community character of  the property:  a single asset can be part separate and part community.

 

3.      Testamentary Power

 

Each spouse has the power to dispose of their own separate property and half of the community property.

 

         B.  Dower

 

In creating protections for surviving spouses, the common law distinguished between widowers and widows.  A widower got a life estate in all of the lands his wife owned during the marriage, if issue who could inherit the land were born of that marriage.  The widower’s right came to be called “curtesy.”  A widow, on the other hand, got a life estate in one-third of the lands her husband owned during the marriage; children were not required, but the estate to which the right attached had to be one that issue could inherit if they were born.  The widow’s right was called “dower.”  Most states have abolished both doctrines, but some retain various versions of dower and apply them to both men and women. 

 

         C.  The Right to Elect

 

1.      Traditional Approaches

 

Regardless of a will’s provisions, under traditional statutes a surviving spouse can claim a share of the decedent’s probate estate.  Note there is no claim to joint tenancy property, property held in trust, life insurance, or other will substitutes.

 

                     a.   Capturing Nonprobate Assets

 

Some courts have found troubling the specter of someone “emptying” the probate estate before death to defeat a surviving spouse’s claim.  In response, these courts have fashioned various theories to protect a disinherited spouse by extending the right of election to nonprobate assets.  Most of the cases take one of these approaches:

 

i.        Intent

 

Some courts focus on the testator’s intent (sometimes “fraudulent” intent), and tend to consider a variety of factors, giving different weight to each in particular instances.  Some examples:

 

·  How soon before death a gift was made. See McClure v. Stegall, 729 S.W.2d 263 (Tenn. Ct. App. 1987).

·  The amount of support otherwise available to the spouse.  See Warren v. Compton, 626 S.W.2d 12 (Tenn. App. 1981).

·  The relationship of the spouses.  See In re Estate of Fisher, 440 N.Y.S.2d 519 (N.Y. Sur. Ct. 1981).

 

 

ii.   Illusory Transfer

     

Other courts ask if the lifetime transfer was “illusory.”  See Newman v. Dore, 9 N.E.2d 966 (N.Y. 1937).

 

iii.  An Objective Test

 

Sullivan v. Burkin, 460 N.E.2d 572 (Mass. 1984), adopted an objective test.  If, during the marriage, the deceased spouse created an inter vivos trust over which he or she alone retained a general power of appointment, the assets in the trust would be subject to spousal election.

 

               2.   Weaknesses in the Traditional System

 

When views from the perspective of marriage as a relationship to which both spouses contribute and from which both benefit, traditional elective share statutes produce two kinds of unfair results.

 

a.   Under-protection

 

When will substitutes leave only a few assets in the decedent’s estate, the survivor is left with an unfairly small share to elect against.  Moreover, if the marriage has lasted for some time, the survivor’s percentage claim may be much smaller than an equal sharing of the fruits of the marriage.

 

b.   Over-protection

 

A survivor who benefits substantially from non-probate transfers can get even more by electing against a will.  Moreover, if the marriage has been short, the survivor’s percentage claim may be much greater than an equal sharing of the fruits of the marriage.

 

               3.   The Uniform Probate Code

 

The drafters of the Uniform Probate Code have sought to address the basic weaknesses in the traditional approach to spousal election.  The UPC’s reforms have come in two stages.

 

                     a.   The First Augmented Estate

 

The original version of the UPC created the concept of an “augmented estate” against which a disappointed spouse could elect.  UPC (pre-1990) § 2-202.  In some ways, it is a system made not to be used.  The theory is that by making it virtually impossible for one spouse to defeat the other’s share, or for a survivor who was well cared for to “double dip” by electing and taking more, people would not bother.

 

The augmented estate includes both will substitutes that do not benefit the surviving spouse, and those that do.  The survivor can claim a one-third share of that larger pot, but is credited with the value of property already received.  For examples, see text pages 162-163. 

 

                     b.   A New Approach

 

In the 1990’s UPC reshaped the spousal election machinery: the survivor’s share now increases over the length of the marriage, and spouses now share the total assets of the marital unit.  The revised version also mandates a minimum $50,000 share.  See UPC §§ 2-202 to 2-208.

 

Working through a problem under this system requires four basic steps:

 

(1) Identify the “elective share percentage” to which the surviving spouse is entitled by referring to a chart showing increasing percentages over the length of a marriage.

 

(2) Calculate the augmented estate by including all assets of both spouses, regardless of how title is held.

 

(3) Determine the elective share by multiplying (1) and (2).  If the amount is less than $50,000, a “supplemental elective-share amount” is available to bring the total up to $50,000.

 

(4) Identify the property used to satisfy the elective share.  If the surviving spouse already has that much, we need look no further.  If not, the spouse can get property from the decedent’s other beneficiaries.

 

                           For details and examples, see text pages 164-168.

 

               4.   Incompetent Spouses

 

Usually courts will allow a guardian to elect on behalf of an incompetent surviving spouse if that would be in the “best interests” of the survivor.  They disagree on whether to consider all the circumstances or only whether election will produce the most economic value for the survivor.  See In re Estate of Clarkson, 226 N.W.2d 334 (Neb. 1975).

 

UPC § 2-212(b) takes a different approach.  To the extent that the elective share includes the decedent’s property and nonprobate property the spouse transferred to others, that property is placed in trust for an incompetent survivor.  The trustee uses the money to support the survivor (and others dependent upon the survivor).  Anything left after the survivor’s death passes under the predeceased spouse’s will or goes to that spouse’s intestate heirs.

 

         D.  Migrating Couples

 

Because of the different systems of marital property in common law and in community property jurisdictions, couples who move between the two face a variety of problems.  Under traditional conflict of laws rules, different laws can apply to different aspects of marital property.  The law of the situs of real property controls that property; the law of the marital domicile at the time personal property is acquired determines its character (community or separate); and the law of the marital domicile at death determines the surviving spouse’s rights. See William M. Richman & William L. Reynolds, Understanding Conflict of Laws, 3d ed. 233-238 (2003).

 

1.  An Example:  Revisiting Sam and Nina

 

Suppose that during Sam’s working years, they live in a common law state and hold everything in Sam’s name.  After retirement, they move to a community property state, which would characterize the property as Sam’s separate property.  Because community property states rely on their basic system to allocate wealth between spouses, these states generally do not provide survivors a right of election against their predeceased spouse’s property.  Nina could be left with neither community property nor a right to elect.

 

Couples moving from a community property state to a common law state may be creating a situation in which a surviving spouse can double dip.  Unless elective share laws reflect the presence of community property, the survivor could retain his or her half of the community and still elect to take part of the decedent’s half.  See Uniform Disposition of Community Property Rights at Death Act, 8A Unif. L. Ann. (2002 Pocket Part).

 

         E.   Agreements Waiving Marital Rights

 

In deciding when to enforce agreements to waive a claim that comes with marriage, courts face conflicts between wanting to allow freedom of contract generally, wanting to encourage marriages which might not happen without these agreements, and wanting to protect against abuse.  To resolve these issues, courts tend to use either one or both of two different approaches.  One view focuses on process, as courts ask whether the parties have made fair disclosures to each other about how much property they own and what the other is giving up.  Another tack is to judge the substantive fairness of the agreement itself.  See Rosenberg v. Lipnick, 389 N.E.2d 385 (Mass. 1979).

 

§ 29  Omitted Family Members  [176-181]

 

Another way in which the law protects families is to guarantee a minimum share to family members omitted from a will.  The typical scenario is of someone who makes a will and sometime later marries or has a child (or additional children), but neglects to amend the will.  A person not covered is often called “pretermitted,” or overlooked.  Virtually all states have statutes protecting such family members, especially children. 

 

The statutes vary in detail but pose similar issues:

 

· Which categories of relatives are protected?

· Does other evidence preclude application of the statute? Two types of evidence might prevent that person from taking: evidence of the testator’s intention, or statutorily-identified family circumstances.

· What share does the relative take?

· Where does the money come from?

 

See UPC §§ 2-301 & 2-302.  For examples, see text pages 177-181.

 

§ 30  Charitable Gifts  [181]

 

At one time, a number of states had so-called “mortmain statutes,” which limit gifts to charity.  These statutes might limit the percentage of property which testators can give to charity, or they might prohibit (or limit) charitable gifts made in a set period before death.  Virtually no states retain these limitations, but the move away from mortmain statutes has been a relatively recent development.

 

§ 31  Public Policy Limits  [182-184]

 

The public policy doctrine nicely illustrates a question central to this chapter and to much of wills and trusts law:  How much freedom should we give people to control the use of property after their deaths?  By its very nature, a doctrine labeled “public policy” defies precise definition.  This mushiness appropriately restrains many courts when applying the doctrine, for they understand that they might easily use it to justify judicial second-guessing of all sorts of testators’ decisions.  See, e.g., Shapira v. Union National Bank, 315 N.E.2d 825 (Ohio Common Pleas 1974);  Hecht v. Superior Court, 20 Cal. Rptr. 2d 275 (Ct. App. 1993).